A.B.A. looks to take distribution to next level

Remember the Route Truck of the Future? Yes, we’re taking the “way back” machine to long-ago Expos when then-experts in shipping and transportation spent endless hours engineering a truck that reduced workplace injuries, enhanced driver safety, provided fuel savings, weighed less and carried maximum loads in minimal space. The American Bakers Association (A.B.A.) even had a full-size prototype of what this futuristic truck might look like at its Transpo ’87 show in Cincinnati.

That’s all changed for the Inter-national Baking Industry Exposition in 2013. The future is now.

Yes, how times have changed, according to Robb MacKie, A.B.A.’s president and CEO. With smaller fleets and the movement toward outsourcing distribution, including direct-store delivery (DSD), the focus has shifted to broader logistical issues and to driving costs out of the system, he said.

Bakeries face a host of issues such as tray loss, cumbersome regulations, aging fleets and equipment that’s more expensive to replace partly because of new emission requirements, according to Bob McGuire, chair of the A.B.A. Logistics Committee.

Working with Jula Kinnaird, Washington representative and ABA liaison to the committee, Mr. McGuire and ABA Logistics Committee members are exploring new ways to get their bakery products to their destination. In this exclusive interview with Baking & Snack, Mr. McGuire reveals how wholesale bakers can be significantly affected by a plethora of issues. For more information, visit www.americanbakers.org.

Bob McGuire: Back in 2010, we did a pretty good job forecasting the major issues that were looming. The issues we faced then remain the same. We are just at different points of dealing with them. At that time, we noted that good driver availability was thinning, tray loss remained a big issue and regulatory control dominated the challenges for fleet managers. They still are.

Why is the driver pool shrinking?

It is estimated that the group of Americans over the age of 55 will increase 30% over the next couple of years. The result will be a shortage of qualified drivers as truck driving is not viewed as an attractive career option. The American Trucking Association estimated that up to 30,000 new drivers will be needed this year to replace retiring employees and handle increased demand. The shortage is giving more leverage to drivers who are seeking better pay and benefits.

The government’s CSA 2010 (Compliance, Safety, Accountability) regulations and the new Hours of Service changes put further pressure on driver demand. CSA 2010 regulations have taken hold. CSA 2010 is a very good, very effective program. Fleets are improving their safety focus and procedures, and in doing so, many of the less-then-safe drivers continue to be removed from safety-responsible fleets.

What other factors will affect driver availability?

Additionally, the cost of power equipment has increased significantly over the last several years. The 2007 and 2010 engine emission standard changes have increased the cost of new equipment. Fleet managers have opted to extend the useful life of power equipment vs. replacement. The fact is the average age of fleets in the country has risen. This can be attributed to the high cost of equipment replacement as well as the economy.

All of this will one day face a growing vibrant economy requiring increased trucking demand. Furthermore, fuel prices remain volatile. All of this will require logistics managers to aggressively seek operational cost control strategies.

Has there been progress with the issue of tray loss?

There has been some very nice activity here. Two significant strategies are being employed to further control and manage tray loss. The first is legal action whereby tray theft is being classified as a felony. This new state initiative in Maryland has the potential to be a model for the country.

Second, the use of technology continues to be tested for application. Although the results have been mixed, the learning continues.

What challenges do bakers face during this IBIE year?

Three years ago, we were in the early stages of a declining economy. Today, we are at a different point towards recovery. It may be too early to state that we are on the road to prosperity. While the future may look bright, there are always areas of uncertainty that must be dealt with caution. The amount of freight being moved has increased gradually since November 2012. In all, tonnage is up 7.6% in the five-month span of November 2012 through March 2013. Freight tonnage is expected to increase 21% during the next decade.

The bottom line? The economic environment that fleets may face in the upcoming three years may be far different than the past three years. The next three years may experience rising costs in a growing economy.

Additionally, the new Hours of Service went into effect July 1. The 11- and 14-hour considerations remain unchanged, but there are several changes that may affect operations.

Lastly, staying abreast of new opportunities will provide operational efficiency. One recent push is using the railroads or intermodal transport options vs. trucks alone. The rail industry has invested heavily in its infrastructure and significantly improved service. Intermodal shipping tripled between 1980 and 2008 and increased 33% from 1998 to 2008. The annual number of rail container shipments was 25 million in 2008.

The challenges going forward will be to properly manage in a growing dynamic economy.

How will these challenges change the way bakers and exhibitors approach IBIE?

The challenge for bakers is to remain competitive. As we approach IBIE, we should seek ways of remaining ­competitive in a dynamic and ­possibly rising cost environment. I believe that the upcoming IBIE will afford ­bakers plenty of opportunity to seek areas of productivity and cost-­­control ­improvements.